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Walmart ignored money transfer scheme that scammed customers out of millions, feds say

Walmart customers lost “hundreds of millions” in scams involving money transfers that went largely unchecked, according to a federal lawsuit.

The Federal Trade Commission alleges that, for years, Walmart did little to stop scammers from using money transfer services to receive payments for phony sweepstakes, “grandparent” scams and other fraud at its stores, according to a civil complaint filed Tuesday, June 28.

The retail giant offers several financial services — including Western Union and MoneyGram — that the FTC says it failed to secure, allowing scammers to take advantage and steal from unsuspecting customers.

“While scammers used its money transfer services to make off with cash, Walmart looked the other way and pocketed millions in fees,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a news release. “Consumers have lost hundreds of millions, and the Commission is holding Walmart accountable for letting fraudsters fleece its customers.”

The 59-page complaint points to multiple police investigations that found fraudsters relied heavily on Walmart’s money transfer services to get payments. Between 2013 and 2018, more than $197 million in money transfers that were flagged as fraudulent were either sent or received at Walmart, the FTC said, citing fraud data.

Further, the commission says Walmart harmed customers by:

  • Completing transfers, even when fraud was suspected

  • Having an ineffective anti-fraud policy

  • Paying large payments in cash

  • Failing to display materials that warned customers about fraud/money scams

  • Failing to properly train and retrain employees

  • Allowing money transfers to be used for telemarketing services

“As a result of Walmart’s failure to take appropriate steps to mitigate the problem, consumers have lost substantial sums to frauds through money transfers effected at Walmart,” the lawsuit states.

The FTC seeks reimbursement for consumers and is calling on a federal court to hit Walmart with civil penalties.

Walmart blasts ‘legally baseless’ complaint

Walmart has responded to the complaint, calling it “factually flawed and legally baseless.”

“Claiming an unprecedented expansion of the FTC’s authority, the agency seeks to blame Walmart for fraud that the agency already attributed to another company ... “ according to a statement posted on the retailer’s website.

Citing its anti-fraud program, Walmart said it stopped “hundreds of thousands” of questionable transactions by bad actors looking to commit fraud. It shook up the money transfer industry when it introduced a low-cost money transfer option for “unbanked and underbanked” customers, according to Walmart.

“Walmart will defend the company’s robust anti-fraud efforts that have helped protect countless consumers, all while Walmart has driven down prices and saved consumers an estimated $6 billion in money transfer fees,” the company said.

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